Rethinking Pakistan’s welfare systems after Covid-19

The costs of ignoring current welfare challenges will be devastating for Pakistan’s most marginalised citizens.
Published May 23, 2020

Poverty in Pakistan may more than double, from 23% to 57%, as a result of the Covid-19 shock, according to one estimate from the Pakistan Institute of Development Economics. This is a dire picture and has the potential to undo much of the progress in poverty reduction that has occurred in Pakistan, particularly over the past two decades, unless urgent action is taken by the federal government.

The lockdown versus livelihoods false binary that has been the primary focus of much public discussion in Pakistan has missed the larger and more urgent picture. The virus is here to stay, at least for a year and probably longer until a vaccine is developed, which means that neither is a prolonged lockdown sustainable and nor will the economy return to the levels it was at before. In fact, with the impending forecast for a global recession, Pakistan’s already slowing economy is likely to contract — the IMF forecasts that the economy will shrink by 1.5%.

Unfortunately, Pakistan’s poorest citizens will suffer most in the imminent downturn. This means that our government needs to take urgent measures to protect the livelihoods of the most vulnerable citizens. Daily wage earners, migrants, and informal sector workers must be at the centre of the design of more expansive social safety nets.

Also read: How do you pay for a programme like PTI's Ehsas?

In this essay, we note the shortcomings of Pakistan's existing welfare system in light of the pandemic. We also highlight the need for expanding Pakistan’s social safety nets in a systemic way, while learning lessons from past experiences with various programmes and what has been done in other similar countries.

BISP and Ehsaas Emergency Cash transfers

The Benazir Income Support Programme (BISP), Pakistan’s largest federally funded social safety net, has been at the centre of the federal government’s response to Covid-19. From the programme’s existing 4 million beneficiaries, the Ehsaas Emergency Cash transfers has extended one-time cash disbursement of Rs12,000 to an additional 8 million households. These emergency cash transfers are the biggest in Pakistan’s history and were made possible because the country has developed a nationwide cash transfer delivery system under BISP including the use of digital technology. While this is a very positive first step, these one-time cash transfers must be the start of a more long-term approach to social welfare, which also reaches segments of the population that do not have mobile and internet access or national identity cards. Technology can aid public outreach, but is no substitute for investments in capacity at the local level.

The BISP cash transfer programme was a significant milestone in establishing Pakistan’s limited welfare architecture. The scale of the programme has been an important step to redefine the social contract enshrined in the Constitution which calls for the state to protect its citizens from risks. There are many lessons to be learned about how BISP became Pakistan’s largest safety net, adopted by three successive elected governments since its establishment in 2008. Perhaps one of the most important lessons was that targeting needs to be well-designed: BISP developed a poverty registry known as the National Socio-Economic Registry (NSER) from which beneficiaries were selected based on welfare indicators known as a proxy means test (PMT). BISP has also undergone rigorous third-party evaluations; there is already some evidence that shows the programme has had impact on nutrition and increasing consumption for some of Pakistan’s poorest households. The programme’s exclusive targeting of women has also been a 'paradigm shift' in addressing the social rights of Pakistan poorest female citizens, millions of whom have received social welfare for the first time in their lives.

However, the Covid-19 pandemic also exposes the limits of Pakistan’s existing welfare architecture. While the government has previously focused on excluding those who it classifies as ineligible for BISP, there is now an equal need to focus on 'errors of exclusion'. In other words, there is a need to reach out to those citizens who should be in the safety net but are excluded for some reason, such as those without mobile phones or national identity cards. The urban poor and migrant workers who come to Pakistan’s cities to seek casual employment are likely suffering the heaviest brunt of the lockdown and slower economic activity, but will largely be unable to access any welfare scheme. Already, a survey conducted in April 2020 by Dr Farah Said and her co-authors found that for small-business owners in Punjab and Sindh, household income had fallen by 90%.

While the expansion of BISP and the additional one-time emergency cash transfers under Ehsaas are an admirable step, given the grim circumstances, these measures in and of themselves will not be sufficient for the aforementioned reasons. There is an urgent need to think more ambitiously about systemic approaches to expanding social safety nets given the pervasive effects of this shock. Importantly, Pakistan must move beyond the standard announcement of ad hoc 'relief packages', which are frequently given to rent-seeking industrialists and business interests, or relying on small donor funded pilots that end when funding dries out.

Expanding welfare provision beyond cash transfers

Ensuring food security and employment for the poorest citizens must be the federal government’s urgent priority in the coming months and years. This is no small task and requires careful planning, new and creative ways of targeting those who are outside the safety net, and an unprecedented fiscal commitment to social welfare expansion. International experiences have shown that public works programmes, where the state employs people for various projects, and food distribution programmes, such as providing meals to school children, have been immensely successful in expanding welfare nets. Out of the box thinking is needed to come up with suitable long-term programmes for Pakistan’s context.

More on this: Imran Khan envisions a Pakistani welfare state. Is it possible?

In neighbouring India, the foundation of a rights-based welfare system was put in place after 2005, which could play a vital role in addressing the devastating impacts of Covid-19 there. Two key components of India's welfare system are the constitutional guarantees of right to food and the right to work. To make these social entitlements actionable, two programmes were established: a minimum guarantee of food through a nationwide food distribution network known as the Public Distribution System (PDS), and the National Employment Guarantee Act (NREGA), which guarantees a hundred days of employment to India’s poorest citizens. Activists and leading economists in India are now calling for their government to expand the PDS food allocations and the number of days of work provided by NREGA to give relief to India’s vulnerable daily wage and migrant workers. In Bangladesh, a similar public works programme provides employment to seasonal agricultural workers during the lean season for rice growing in October- November when there is a dearth of rural employment and concerns about poor families’ ability purchase food supplies.

In Pakistan, despite the successful implementation of a national cash transfer programme, there is no equivalent public works programme to ensure that those who have lost their livelihoods can obtain critical employment in the difficult days ahead. There was briefly an experimentation with the Peoples Work Programme (PPP) in the 1970s, however, lack of proper oversight and poor design resulted in a largely unsuccessful programme that was subsequently disbanded. Past experience with social welfare programmes, such as Zakat and Bait-ul-Maal, also shows that poorly designed programmes can divert social transfers away from their most deserving recipients.

Similarly, with regards to food distribution, Pakistan lacks a national system for food distribution, despite large government procurement of wheat and subsidies for agriculture. The public utility stores, which are also heavily subsidised by the federal government, do not benefit Pakistan's poorest citizens. The more recent Ehsaas-Langar programme simply does not have the outreach to effectively address the scale of malnutrition and hunger prevalent in many parts of Pakistan, which is likely to exacerbate by the impact of the Covid-19 outbreak. According to the Demographic and Health Survey 2017-18, nearly two in five children are stunted in Pakistan, whereas research by Haris Gazdar and Ayesha Mysorewala suggests that 30% of the population experiences hunger.

In numerous countries, public schools provide mid-day meals to students, making the public school an important component of the welfare system. A similar programme in Pakistan could ensure public-school going children receive a simple but nutritious meal. There are many examples of countries of similar income levels to Pakistan that have developed such programmes, which indicates that it is possible if the political will exists to change Pakistan’s spending priorities and expand the country's social safety nets.

Coordinating federal and provincial welfare responses

Since the passing of the landmark 18th amendment, a substantial portion of social welfare provision, including healthcare and education, has been devolved to the provinces. As a result, there has been an expansion in provincial social welfare programmes reflecting regional priorities. The government of Punjab has run a girls’ education stipend programme to improve enrollment levels for female students, Sindh has extended microcredit to poor women and is in the process of developing a social registry to address hunger and malnutrition prevalent in the province. At the same time, Khyber Pakhtunkhwa has expanded health insurance to its poorest citizens. These examples of provincial social welfare are important, but also underline the fact that the provinces simply do not have the resources or existing programmes in place to address the challenges for welfare provision that Covid-19 has created.

Read further | Welfare state: Easier said than done

The concerns about insufficient federal government support to the provinces in responding to the outbreak were echoed in a recent session of the National Assembly by a cross-section of parliamentarians, and these concerns need to be taken seriously by the country's policy makers. Covid-19 provides an important opportunity for Pakistan to expand and consolidate its fractured welfare system. Numerous governments in Pakistan have expressed the desire to build a welfare state, but those rhetorical appeals seem hollow unless supported by concrete steps to expand the scope of Pakistan’s limited existing safety nets. The Covid-19 pandemic has resulted in a complex public health, economic and social crisis that requires our policymakers to act decisively and build consensus to develop well-designed programmes that complement rather than compete with the existing welfare programmes at both the federal and provincial levels.

The BISP, which was also established amidst a global financial crisis, has been an important experience for Pakistan in building a credible national social safety net. It is now time to build on the lessons of BISP and think about additional long-term programmes that will address the pressing health, employment and hunger concerns for Pakistan’s poorest citizens. Evidence from across the globe shows that well-designed social safety nets not only play a critical role in reducing poverty, but also help strengthen fractured national solidarities and citizenship in new democracies where the social contract between the state and citizens has been weak. The costs of ignoring current welfare challenges will be devastating for Pakistan’s most marginalised citizens unless new and ambitious public policy measures are taken.